Osborne’s Smoke and Mirrors Budget

"When I use a word," Humpty Dumpty said, in a rather scornful tone, "it means just what I choose it to mean ­– neither more nor less. "The question is," said Alice, "whether you can make words mean so many different things." "The question is," said Humpty Dumpty, "which is to be master – that's all." Through the Looking Glass

The so-called ‘summer budget’ is a dishonest set of tricks designed to hide how much low paid workers will be financially worse off and even more insecure. Instead of cutting welfare for the low-paid he has ‘only’ frozen working age benefits (including tax credits and Local Housing Allowance) for the next four years. In addition maternity pay and disability benefits – PIP, DLA and ESA Support Group are supposedly excluded from the freeze. Also, the amount anyone can earn without being taxed is set to rise from £10,600 to £10,800 in 2016-17 and £11,000 in 2017-18. Wow! Osborne’s coup de theatre was his announcement of a new “national living wage” to replace the old minimum wage. “Working people aged 25 and over will receive it. It will start next April, at the rate of £7.20.” In fact this will mean all of 50 pence more than the adult minimum wage which will be £6.70 when it goes up 20p in October. Clearly this won’t make a startling difference to anyone’s quality of life but it sounds better. Plus, there’s the promise that by 2020 the ‘living wage’ will have reached 60% of average (median) earnings. None of this sounds like a great gain but “hard working families” struggling to cope on low wages might be forgiven for breathing a sigh of relief that they are at least not going to be worse off.

Nothing could be further from the truth. That is not just our say-so. The Institute for Fiscal Studies (IFS) says low-paid workers will 'unequivocally' be worse-off than before the budget which also, naturally, will take much more from the poor than the rich. For a start, the measly rise in the tax-free earnings threshold is more than cancelled out by the 4 year freeze on benefits which the IFS says will cost 13 million families £260 per year. Regarding the ‘living wage’, the IFS points out that this is just the minimum wage re-branded and is far outweighed by creative cuts to tax credits such as lowering the ‘income threshold’ at which the amount you are officially entitled to is reduced; then upping the rate which that figure is reduced if your earnings go up, and so on. The Social Mobility and Child Poverty Commission says all these cuts by subterfuge to tax credits will reduce the incomes of 45 per cent of working families.

As for the pretence that benefits to the sick and disabled will be protected, this is another piece of cynical hypocrisy since all new Employment and Support Allowance claimants will have their claims aligned with the Job Seekers' Allowance rate, so reducing their benefit by 30% in one stroke. (From £101 p/w to £73.40.)

"The best route out of poverty is work." George Osborne during his budget speech 8th July.

The list of riders to this budget for working people goes on and we are in no position to go into every detail. However, the picture is clear. After using the welfare system to oblige people to work for less than a living wage, the state is now withdrawing as much financial support as it can from those workers. This means they are left with nothing but the low pay which was once deemed unacceptable in an advanced capitalist society. The pretence that the new ‘living wage’ will reverse the trend towards a low-pay economy is a nasty joke for those who have the pleasure of finding themselves at the short end of the summer budget cuts.

For young people starting their working lives the outlook is bleak. The aim is to stop school leavers who are not ‘in work or training’ from being able to claim any sort of financial support. Osborne’s promise of "intensive regime of support from day one of their benefit claim" threatens another variety of workfare. Not to worry. School leavers may find it easier to get a job since they are exempted from the new living/minimum wage. In fact the ‘living wage’ will only apply to people over 25 years old. Plenty of scope therefore for employers to find cheaper labour from the pool of younger workers. For young people the prospect is they will have to work for even lower wages than they do now. Moreover, by scrapping entitlement to housing benefit for 18-20 year olds the budget also makes it more difficult for them to live independent lives. It will also contribute to the growing number of homeless. Jon Sparkes, chief executive of Crisis, the homeless charity, points out: "Under-25s already make up a third of homeless people and there is a real danger these changes could make things even worse. For many young people, living with their parents simply isn’t an option."

On the housing front, the mysterious one percent annual cut in social housing rents over the next four years is offset by the promise that those on higher incomes living in social housing (families earning over £40,000 in London, or £30,000 elsewhere) will be charged “market rate rents”.

In short, this budget continues the programme of chopping away at working class living standards. It is a programme shared by all the advanced capitalist states, no matter who is in power. Like everywhere else, the present government’s declared aim of boosting productivity and creating well-paid skilled jobs by investing in new infrastructure and hi-tech manufacturing is completely undermined by the low rate of profit which deters such investments. Instead, capitalism is resorting more and more to what it always does in times of systemic crisis: increasing exploitation of the working class by means of reducing wages and state benefits so that a greater share of the social product goes to the capitalist class. This is increasingly producing, as Marx predicted:

"an accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation ..." for the class which produces all society's wealth. Here the trick so far has been to divide workers against each other by propagating the myth that people ‘on benefits’ are the undeserving poor. The one consolation is that the more those benefits are reduced and the more all wage workers find themselves in the same low pay, precarious boat, the greater the possibility of a concerted working class fight back. This is the first step needed towards getting rid of capitalism and replacing it with a civilised world community where everyone is actively engaged in production and distribution directly to meet human needs.


June 10, 2015

Friday, July 10, 2015


The best route out of poverty under the present conditions of obsolete capitalism isn't work, as the lying Chancellor advocates, but death itself. And "the living wage" might just about pay for a funeral - if you're lucky and go for a plywood coffin that is.

An even better route out of poverty however would be for us workers to bring about the death of capitalism itself and sod it's funeral. Just leave it to rot! This is the only real way out of poverty; the only real way to bring about and assert life itself, that is communism, as the long awaited solution to the austerity, hypocrisy and living death of capitalism's ice-cold grip.

The accumulation of misery, agony of toil, slavery, ignorance, brutality, and mental degradation as Marx describes it just goes on and on seemingly non-stop. Is it worse now than in his day? I don't know. But of one thing I'm sure, the time is long overdue for us workers to get ourselves and our act together and direct this nauseating and disgusting way of life called capitalism to the dustbins of history.

So thank you ERayner for the clarity and impact of your article. It should be made compulsory reading in all work places. Perhaps George Osborne could help arrange this?

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